Wendy's 2014 Annual Report Download - page 81

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THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(3) Acquisitions and Dispositions
Acquisitions
During the year ended December 28, 2014, Wendy’s acquired 45 franchised restaurants for total net cash
consideration of $53,954. The total consideration was allocated to net tangible and identifiable intangible assets
acquired, primarily properties of $19,857 and franchise rights of $6,650, based on their estimated fair values. Of these
restaurants, 18 were acquired in the fourth quarter and immediately sold to a franchisee. As a result, no intangible
assets or goodwill were recognized on this acquisition. The Company retained the land, building and leasehold
improvements, which have been leased to the franchisee. Three of the franchised restaurants were acquired during the
second quarter of 2014 and the fair value of the assets acquired exceeded the total consideration, resulting in income
of $349 after post-closing adjustments which is included in “Other operating expense, net.” The remaining franchised
restaurants acquired during 2014 resulted in an excess of consideration over the estimated fair value of assets acquired
of $11,455 which was recognized as goodwill.
During the year ended December 29, 2013, Wendy’s acquired one franchised restaurant; such transaction was
not significant. See Note 6 for discussion of the step-acquisition of our investment in a joint venture in Japan.
On June 11, 2012, Wendy’s acquired 30 franchised restaurants in the Austin, Texas area from Pisces Foods,
L.P. (“Pisces”) and Near Holdings, L.P. (the “Pisces Acquisition”). The purchase price was $18,915 in cash, including
closing adjustments. Wendy’s also agreed to lease the real estate, buildings and improvements related to 23 of the
acquired restaurants from Pisces which were considered part of the purchase transaction and to assume ground leases
for five of the acquired restaurants and building leases for two of the acquired restaurants. Wendy’s did not incur any
material acquisition-related costs associated with the Pisces Acquisition.
The operating results of the 30 franchised restaurants acquired were included in our consolidated financial
statements beginning on the acquisition date through the subsequent sale during the fourth quarter of 2013 to a
franchisee in connection with our system optimization initiative. Such results were not material to our consolidated
financial statements.
The table below presents the allocation of the total purchase price, including closing adjustments, to the fair
value of assets acquired and liabilities assumed at the acquisition date.
Total purchase price paid in cash ............................................... $18,915
Identifiable assets acquired and liabilities assumed:
Cash ............................................................. 55
Inventories ........................................................ 149
Properties ......................................................... 12,485
Deferred taxes and other assets ......................................... 1,773
Acquired territory rights (a) ........................................... 18,390
Favorable ground leases .............................................. 222
Capitalized lease obligations ........................................... (14,394)
Deferred vendor incentives ............................................ (382)
Unfavorable leases .................................................. (992)
Other liabilities ..................................................... (952)
Total identifiable net assets ........................................ 16,354
Goodwill (b) ............................................................... $ 2,561
(a) The acquired territory rights had a weighted average amortization period of 13 years. Due to the subsequent sale
of this territory, we accelerated the amortization through the date of sale.
(b) This goodwill was not deductible or amortizable for income tax purposes. In addition, the goodwill was disposed
of as a result of the subsequent sale of this territory.
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